(Reuters) - Boeing (BA.N) is set to restart deliveries of its 787 Dreamliner to China within days, a source told Reuters, a step that could pave the way for China to also end a more than four-year freeze on deliveries of Boeing's profit-making 737 MAX.
Juneyao Airlines, a privately owned Chinese carrier, will receive in Shanghai a new 787 Dreamliner from Seattle, a source familiar with the matter said. It could take off as soon as Thursday, the person said.
A restart of MAX deliveries would represent a reset of Boeing's relationship with China and be a bigger financial boon that allows it to offload dozens of planes in its inventory, but this Dreamliner delivery is also important, as it is seen as a stepping stone for a larger breakthrough in future deliveries and orders.
"This is a move by the (Chinese) government that might just signal to the airlines that they're free to take deliveries and perhaps even place orders," said Richard Aboulafia of AeroDynamic Advisories.
Chinese orders and deliveries of Boeing planes have been largely suspended since 2019 after two fatal 737 MAX crashes in 2018 and 2019 led to the MAX being grounded worldwide in 2019.
Boeing shares were up 1.6% in premarket trade.
Analysts have been expecting the resumption of Dreamliner deliveries to China after consultancy AAP/AIR reported this month preparatory flight activities for a 787 designated for Juneyao Airlines, registered as B-20EQ.
Twelve of the 60 undelivered 787s in Boeing's inventory are dedicated to Chinese operators, Jefferies said Tuesday.
For Boeing, restarting deliveries would symbolize the re-opening of doors to one of the world's most important aerospace markets, which Boeing projects will compose 20% of the world’s aircraft demand through 2042.
But while any progress with China is good news, Boeing's future business with Chinese airlines will continue to be vulnerable to geopolitical shifts between Washington and Beijing, said Rob Stallard of Vertical Research Partners.
"I would be surprised if Boeing feels inclined to raise its 2025-26 guidance," he said.
A PATH TO MAX DELIVERIES
Trade publication The Air Current said on Wednesday Boeing had this month won a key clearance from China's aviation regulator, the Civil Aviation Administration of China (CAAC), allowing the planemaker to prepare MAX aircraft for delivery.
The safety bans have been lifted as existing MAX planes are flying inside China, but new deliveries have remained on hold.
"We continue to support our customers in China and will be ready to deliver for our customers when that time comes," Boeing said in separate responses to the Juneyao news and the Air Current reports.
The CAAC's deputy head on Dec. 8 told a Boeing executive in Beijing the planemaker was welcome to deepen its development in the Chinese market, Reuters reported. The Air Current, citing unidentified sources, said the regulator's clearance was granted that day.
Individual MAX deliveries to China still need approval from China's National Development and Reform Commission (NDRC), the Air Current report said.
The CAAC and NDRC did not immediately respond to Reuters' requests for comment.
A 737 MAX designated for China Southern Airlines (600029.SS) flew from Boeing Field in Seattle to Boeing's nearby facility in Moses Lake, Washington, and back on Wednesday afternoon, according to data from flight tracking website FlightRadar24.
Analysts from Jefferies and Deutsche Bank said in investor notes that it appeared to be a customer acceptance flight - a test flight operated by an airline pilot that occurs before delivery.
MAX deliveries to China could provide some upside to Boeing’s $10 billion free cash flow target for 2025-2026, as that projection did not factor in potential deliveries to China, analysts have said.
Boeing has maintained 85 MAXs for Chinese customers in its inventory of about 220 planes and collects the bulk of its payment upon delivery.